By Jennifer Dlouhy, Jennifer.Dlouhy@HearstNP.com

Published 4:40 pm, Thursday, November 10, 2011

Several signs line Texas 73 near the Port Arthur Civic Center to show support of the Keystone XLPipeline on Monday, Sept. 26, 2011.
Guiseppe Barranco/The Enterprise
Photo: Guiseppe Barranco

Several signs line Texas 73 near the Port Arthur Civic Center to...

Workers wearing anti-OPEC shirts listen during the U.S. State Department's open hearing for the proposed Keystone XL Pipeline at the Port Arthur Civic Center Monday, Sept. 26, 2011. If constructed, the planned pipeline would connect TransCanada tar sands to refineries in Port Arthur and Houston. Hundreds attended the event to show support of the jobs that the pipeline's construction would bring to the area. TransCanada has estimated that the project could create 20,000 U.S. jobs.
Guiseppe Barranco/The Enterprise
Photo: Guiseppe Barranco

The Obama administration said today it will consider alternative routes for the Keystone XL oil pipeline to avoid ecologically sensitive areas of America's heartland - a move that delays a final decision on the controversial project until after the 2012 election.

The move solves a political dilemma for President Barack Obama, who risked alienating key voting blocs no matter what decision he made on the pipeline that would carry Canadian oil sands crude from Alberta to Port Arthur. The project pitted environmentalists against some labor unions and the oil industry, and Obama would have been delivering a verdict before an election that could turn on who can do the most to turn around the nation's ailing economy.

In a statement, Obama said the State Department made the right move.

"Because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood," Obama said. "The final decision should be guided by an open, transparent process that is informed by the best available science and the voices of the American people."

Industry officials who back the pipeline accused the White House of playing politics by courting Obama's environmental base at the expense of potentially thousands of construction jobs linked to the project.

"This is clearly about politics and keeping a radical constituency opposed to any and all oil and gas development in the president's camp in 2012," said Jack Gerard, president of the American Petroleum Institute. "It appears there is only one job that is being focused on here."

Environmentalists cheered the decision as a major victory for the movement. Many have long argued the project would make the U.S. more dependent on a form of bituminous oil that takes more energy to extract than other fossil fuels.

The State Department said it would examine "in-depth alternative routes that would avoid the Sand Hills in Nebraska," in light of broad "national concern" about Keystone XL's proposed 1,700-mile route.

Administration officials estimated that it would take until at least early 2013 to complete required environmental reviews of a new pipeline path - before the State Department could decide whether the project was in the "national interest."

Secretary of State Kerri-Ann Jones insisted that Thursday's decision was not political.

"This decision is based on the process that we have been going through." Jones said. "The White House did not have anything to do with this decision. They did not direct us to make this decision."

TransCanada Corp., which first sought approval for the project three years ago, said it would continue seeking a pipeline permit.

But Girling acknowledged that may come too late for refiners who have inked contracts for crude that would be carried by Keystone XL.

"Supplies of heavy crude from Venezuela and Mexico to U.S. refineries will soon end," Girling said. "If Keystone XL is continually delayed, these refiners may have to look for other ways of getting the oil they need. Oil sands producers face the same dilemma - how to get their crude oil to the Gulf Coast."

San Antonio-based Valero, the nation's largest independent refiner, called the delay "unfortunate" and "short-sighted."

"This decision is due to a small and misguided group of extremists who fail to realize that fossil fuels will continue to be consumed because they are efficient and economically viable," Valero said in a statement. "The administration's decision will actually increase greenhouse gas emissions because without this project, oil will be transported further and by more carbon-intensive means."

Some organized labor groups have argued that approving the pipeline could swiftly put thousands of pipefitters and union members to work. And oil industry advocates insisted that Keystone XL would ensure the United States gets more of the oil it needs from a friendly North American ally while providing a new route for oil extracted from the Bakken shale in Montana to reach Texas refineries.

"The project won't be able to stand the scrutiny because Americans now understand that it will increase our addiction to dirty, expensive tar sands oil for decades," Schweiger said. "You can change the route, but it is still the wrong project at a time when we need investments in clean energy alternatives that don't spill, don't pollute and don't run out."

The State Department already looked at 14 different route options as part of its final environmental review of the pipeline.

But Jones noted the alternatives that the State Department studied did not include routes that avoided the Sand Hills while still going through Nebraska.

"It's a very important issue for the state," Jones said.

Following an environmental analysis, the State Department concluded in August that there would be "no significant impacts to most resources" in Keystone XL's 1,700-mile path. The State Department also said potential spills from the pipeline "would likely be limited." That kicked off a 90-day period for the State Department to evaluate whether the project is in the "national interest."